9. Assignment of Proceeding
Susan P. Kennedy is the Assigned Commissioner and Glen Walker is the assigned ALJ in this proceeding.
Findings of Fact
1. Petitioners seek expedited action by the Commission for relief from certain insurance requirements of GO 120-C applicable to commercial hot air balloon operations.
2. Insurance for providers of hot air balloon rides to the public has become difficult if not impossible to obtain in a manner that meets all current requirements of GO 120-C.
3. Approximately 50 companies offer balloon rides throughout California, concentrated in popular tourist regions.
4. Most commercial balloons are designed to carry more than six passengers, and the largest can carry up to 16 passengers.
5. Hot air balloons are certificated and regulated by the FAA.
6. Under GO 120-C, manned balloon operators are required to carry passenger liability insurance of at least $100,000 per passenger seat, along with aircraft property damage liability insurance of at least $100,000 per accident, and aircraft bodily injury and death liability coverage for persons other than those aboard the aircraft of $300,00 per accident.
7. Balloon insurance today is apparently available only through one U.S. company, and that company limits the amount of coverage it is willing to write to $1 million.
8. As existing policies lapse and renewal is denied, the Commission staff has issued "cease and desist" letters to operators.
9. Petitioners propose an Interim Plan of insurance coverage.
10. The Interim Plan would be available only to balloon operators in full compliance with FAA requirements and only through financially sound insurance companies.
11. The Interim Plan is likely to permit balloon operators to obtain insurance from a U.S. company that limits maximum liability to $1 million.
12. Failure to grant relief could result in the closing of manned balloon attractions, with corresponding harm to tourist attractions and local economies.
Conclusions of Law
5. Pursuant to Public Utilities Code Section 5503, hot air balloon operators must have protection against liability. Pursuant to Public Utilities Code Sections 5506 and 5511, this coverage must be provided by: a company licensed to write insurance in California, a surety bond issued by a California-licensed surety company, self-insurance, or by a non-admitted insurer in compliance with Section 1763 of the Insurance Code.
6. Petitioners have made a strong showing for adoption of interim relief.
7. The fifth section of Petitioners proposed Interim Plan must be modified to comply with statutory law.
8. The interim plan as modified in accordance with the Discussion above (the Modified Interim Plan) should be adopted on an interim basis pending hearings on whether amendments to GO 120-C are necessary.
INTERIM ORDER
IT IS ORDERED that:
3. The interim relief sought in Application (A.) 03-05-039 is granted as modified by the Discussion above. This Modified Interim Plan is outlined in the Ordering Paragraphs below.
4. Hot air balloon operators who wish to deviate from the provisions of General Order (GO) 120-C may do so to the extent authorized by this decision and in accordance with the following Modified Interim Plan:
a. Each pilot shall have a Federal Aviation Administration (FAA) Commercial, Lighter-Than-Air Pilot Certificate with Balloon class rating.
b. Each pilot: (i) shall meet FAA requirements and demonstrate proficiency as Pilot-In-Command in Category and Class balloon to be flown in the passenger ride business; (ii) Shall attend a balloon safety seminar annually; (iii) Shall complete a biennial flight review in accordance with FAA regulations.
c. Each balloon used shall be FAA-certificated Standard and shall undergo FAA-mandated annual and/or 100-hour inspections from an FAA-certificated repair station.
d. All flight operations and passenger briefings shall be in full compliance with the regulations contained in 14 CFR Part 91 applicable to commercial hot air balloon operations.
e. Each policy of insurance shall be issued by an insurer licensed to write such insurance in California, or, if the insurance is written by a non-admitted insurer, the policy must be issued subject to Section 1763 of the California Insurance Code. Hot air balloon operators may file a copy of the policy of insurance, rather than a Form PE 794, so long as it is signed or certified to in the manner required by Section 7 of GO 120-C.
f. Any hot air balloon operator that demonstrates compliance with the above requirements of this Ordering Paragraph may at its option deviate from the requirements of GO 120-C to the extent set forth in the following Ordering Paragraphs. Compliance with items a through d of this Ordering Paragraph may be shown by a statement of compliance submitted under penalty of perjury.
3. Any hot air balloon operator that meets the requirements of Ordering Paragraph 2, above, may file an insurance policy (or policies) with the Commission that covers only specifically listed aircraft. Any hot air balloon operator that does so, will have its operating authority limited to the aircraft specifically named in the policy (or policies) on file with the Commission, until it files proof of additional insurance.
4. Any hot air balloon operator that meets the requirements of Ordering Paragraph 2, above, may limit its operations by filing with this Commission an affidavit describing the limits on the number of passengers it will carry in each of its balloons so that the insurance it has on file with the Commission will continue to provide $100,000 per passenger aircraft passenger bodily injury and death liability coverage. Any hot air balloon operator that does so will have its operating authority limited accordingly until it increases its coverage, subject to the further provisions of Ordering Paragraph 5.
5. Any hot air balloon operator that meets the requirements of Ordering Paragraph 2, above, may file proof of coverage for additional passengers, beyond those covered by the policy of insurance it has filed with the Commission, so long as it continues to have $100,000 of coverage for each passenger. This additional coverage may be provided either by a surety bond issued by a company licensed to write surety bonds in California, or by self-insurance. Any operator that files coverage for additional passengers as authorized by this Ordering Paragraph shall submit an affidavit describing what, if any, limitations it will place on its operations to ensure that there is $100,000 of passenger bodily injury and death liability coverage in place for all passengers aboard its balloon(s) at any one time. Staff shall limit the operating authority of any operator submitting coverage pursuant to this paragraph so that the required amount of coverage will be in place for all authorized operations.
6. Staff shall grant self-insurance authority to a hot air balloon operator who meets the requirements of Ordering Paragraph 2, above, in order to provide the coverage authorized by Ordering Paragraph 5, above, if the operator submits: (a) a written, binding undertaking to provide the self-insurance, and (b) a confidential financial statement, submitted under penalty of perjury, showing $100,000 in net assets for each $100,000 of proposed self-insurance. (Any such financial statement shall be treated as confidential by the Commission and its staff.)
7. Any hot air balloon operator that desires to establish its ability to self-insure by other means may submit an application to the Commission's Consumer Protection and Safety Division. Staff shall promptly process any such application and promptly prepare a resolution for our approval disposing of any such application.
8. Staff shall take whatever steps are necessary to limit the authority of hot air balloon operators to the extent required by this decision.
9. The assigned ALJ shall set a prehearing conference no later than August 8, 2003, and promptly convene public hearings to consider the issues addressed herein and to allow for full consideration of the insurance requirements applicable to hot air balloon operators set forth in GO 120-C.
10. This Interim Order shall remain in effect until further decision of the Commission, as contemplated in the preceding ordering paragraph.
This order is effective today.
Dated _______________, at San Francisco, California.
